How To Spot A Scam ICO Or Token Sales

The era of token sales and ICOs literally transformed the way businesses both startups and even established businesses raise funds; it created a massive source of funds to be able to do business despite your location or your type of business.

An initial coin offering (ICO) or initial currency offering, a type of crowdfunding using cryptocurrencies, is a means of raising capital that has been prone to scams and securities law violations. An ICO can be a source of capital for startup companies. In an ICO, a quantity of the crowdfunded cryptocurrency is sold to investors in the form of “tokens”, in exchange for legal tender or other cryptocurrencies such as bitcoin or ethereum. These tokens are promoted as future functional units of currency if or when the ICO’s funding goal is met and the project launches.

ICOs provide a means by which startups avoid costs of regulatory compliance and intermediaries, such as venture capitalists, bank and stock exchanges, while increasing risk for investors. ICOs may fall outside existing regulations depending on the nature of the project, or are banned altogether in some jurisdictions, such as China and South Korea.

ICOs created new ways to raise capital to do business but with as every new venture comes new challenges.

One of the major challenges of ICO is regulations, without regulations, some of these projects cannot be monitored and can get away with anything. It has been stated that about 60% of most of the ICOs carried out in 2017 all failed.

So it is Important you know how to spot a fake ICO so you don’t waste your money investing in the wrong projects, you must understand that there are still good projects out there.

So here is a checklist you must watch out for before buying ICO

Team

Over the years from personal experience, the first thing I look out for in any ICO intend to buy is the team, not just pictures of cutes guys on suits; trace their history and experience in their various fields of endeavors. Take your time to go through their social media platforms and verify that these names or the person they claim to be has not being involved in any scam before.

Also, make random Google queries such as “SCAM/Fraud + ‘Name of Person’.

Team members are the first people i look out for in any project, the

First page I read through to know the people am giving out my money, I even send them private messages through their emails or social media platform. You just have to be sure.

Whitepaper

From a project’s whitepaper you can tell a lot about their experience, their exposures and their and where they copied their concepts. Ideology and most times these whitepapers are copied word for word. It is the might paper that shows the ideology behind a project.

A good whitepaper must have the following features:

The team behind the project

A well written description of the project and the basic concept of the ico

The problems the project will solve

The solution to the problem

A roadmap

The fund distribution

Legal aid and cover

Lack of Roadmap

Any ICO project without a detailed roadmap of how to execute their project is either a fake or not organized and that should get investors worried. Your roadmap should show a carefully laid down plan on how to execute your project, being transparent as possible. Lack of detailed roadmap indicates an unserious team.

Minimal Viable Product

A minimal viable product is something that indicates how far the team has been able to carry the project out. A beta website, a platform something should indicate that the team is committed to their project. An MVP is important because it gives you a clue of what the project is about.

Bitcointalk and Github

This is one area potential investors in an ICO must not forget to look out for, a bitcoin talk page of an ICO project allows people who are experienced about blockchain technology and cryptocurrency related matters ask questions and how they defend their ICO project goes a long way to show you how experienced they are about what they are selling to you.

So also, is their Github Repository. You should watch out also for this one.

These are the major thing you must look out for before you buy any ICO, it is very crucial you study the above factors very well before buying ICO, we are aware that not all successful ICO must have all the stated element but it is important an ICO must have the above or some of it.

Kindly hit the share buttons to share with a friend to help them from making the same mistake and not being a victim of a scam ICO

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About Alex Alieja

Alex Alieja is the Chief Executive Officer and Editor-in-Chief of CryptopreneurNg. with a verse experience in Blockchain technology and Cryptocurrency. I'm also the head of human resource at Blockchain Tech Hub and a Tech consultant for Satowallet.